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Merkel faces party critics as plan for new German coalition takes shape

Angela Merkel, the German chancellor, has taken first steps towards forming a new government on Sunday, by aiming to unite the conservative wings of her party which is bitterly divided over refugee policy.

A draft compromise was made during a crisis meeting in Berlin between the christian democratic Union (CDU), chaired by the chancellor and its ally the bavarian CSU, as a prelude to negotiations with other formations to find a government coalition, invoked as a goal " that the number of persons admitted for humanitarian reason shall not exceed 200,000 per year".

Merkel is trying to form a three-way coalition with the FDP and the Greens after her conservatives lost support in a federal election last month and it has been widely speculated that the FDP would demand the top finance post as a price for joining.

Germany took in more than 1 million migrants between 2015 and 2016 but the numbers have drastically gone down since then.

It pledged to keep asylum seekers in secure detention centres to make it easier to send them home if their applications failed.

"It is a good day for the conservatives and a good day for Germany", CSU general secretary Andreas Scheuer said.

The CSU has demanded a cap on refugees, but Merkel has resisted that, arguing it would breach Germany's constitution, which guarantees the right of asylum to anyone facing political persecution.

The AfD, which was founded only four years ago, managed to win over 12 percent of the vote in September.

Talks between the CSU and Angela Merkel’s CDU are expected to epose party divisions including over immigration

Schaeuble, the mastermind of the EU's austerity policy, which imposed budget cuts on countries such as Cyprus, Greece, Ireland, and Portugal in return for German-led bailouts, defended his legacy.

That target looks achievable, given that the number of people arriving in Germany fell from 890,000 in 2015 to about 280,000 a year ago.

But the Greens reject an upper limit for refugees. In his speech, Christian Democratic Union also addressed debate on loss of votes, Merkel said, "The responsible policies require not only being shocked after a selection, but also to see strategic possibilities".

In addition, the two parties agreed to push for an immigration law that would give priority to migrants with skills to plug gaps in the labour market.

Fearing heavy losses to the far-right Alternative for Germany in a state election next year, the CSU has dug in its heels on the issue of a cap to the number of migrants.

Merkel and the head of the Christian Social Union (CSU), Horst Seehofer, plan to spell out the details of the deal Monday.

Once the CDU and CSU have agreed on all their policies, they can start exploratory talks with the FDP and Greens.